Terminal Value

Arezzo Indústria e Comércio S.A. (ARZZ3.SA)


-1.08 (-1.68%)
Growth in perpetuity method:
Long-term growth rate
WACC (%) 6.83
Free cash flow (t + 1) 952.63
Terminal Value 19,723.23
Present Value of Terminal Value 14,174.64

Now that we’ve estimated the free cash flow generated over the five-year forecast period, we need to estimate the value of Arezzo Indústria e Comércio S.A.’s cash flows after that period (if we don’t include this, we would have to assume that Arezzo Indústria e Comércio S.A. stopped operating at the end of the five-year forecast period). To do so, we’ll determine the company’s terminal value.